On the heels of a Big Pharma deal worth up to $500 million, Yumanity Therapeutics is merging its way onto Wall Street. The neuro-focused biotech is joining up with Proteostasis, which once planned to move a cystic fibrosis drug into the clinic this year but is now looking for someone to buy its pipeline.
Slated to close by the end of the year, the all-stock deal will see Proteostasis shareholders pick up all outstanding shares of Yumanity. All told, Yumanity shareholders will own about two-thirds of the combined company, with Proteostasis shareholders holding the remaining one-third. Proteostasis will get two new seats on the company’s board, while all of Yumanity’s directors will continue on, including co-founder, chairman and former CEO Tony Coles, M.D.
"Today's announcement brings together two organizations that share a common scientific heritage in the science of protein misfolding and brings that science one step closer to novel solutions for patients suffering from the debilitation of neurodegenerative diseases," Coles said in a statement. "We look forward to continuing this important clinical work on behalf of patients as we make this transition to becoming a public company."
Yumanity’s lead program, YTX-7739, is in phase 1 for the treatment of Parkinson’s disease. The company is pursuing several other neurodegenerative disease programs, including treatments for dementia, multiple system atrophy and amyotrophic lateral sclerosis (ALS).
Two of those programs are the subject of Yumanity’s partnership with Merck. The Big Pharma is willing to bet as much as $500 million for the exclusive rights to treatments for ALS and frontotemporal lobar dementia, or FTLD, a group of uncommon brain disorders that affect the frontal and temporal lobes of the brain. Merck also chipped into a series C round alongside Yumanity’s backers Fidelity Management, Redmile Group, Pfizer Ventures, Alexandria Venture Investments, Tony Coles and Dolby Family Ventures.
The company raised $45 million in its series A round in 2016. It has kept the amounts of subsequent rounds under wraps but said it has raised more than $100 million from investors.
“Our merger with [Proteostasis] should enable the combined company to grow faster, deliver potential therapies to patients more quickly and create sustainable shareholder value well beyond what either of us would achieve separately," said Yumanity CEO Richard Peters, M.D., Ph.D.
"This merger also ensures that we have access to the additional capital we will need to advance our pipeline of disease-modifying therapies," Peters added.
As for Proteostasis, the company is “pursuing a strategic transaction” for the CFTR modulators it was developing to treat cystic fibrosis (CF). The company had been testing combinations of its drugs on organoids derived from patients and planned to move onto the clinical portion of the study in the fourth quarter.
With the Yumanity deal in the offing, the company has slashed its workforce by 79%, ending up with five full-time staffers who are supporting the merger as well as its efforts to offload its CF assets.
"We believe that our CF drug candidates have the highest probability of reaching patients in the hands of a pharmaceutical company with global development and commercialization capabilities that shares our vision of empowering the global CF patient community with more treatment options is realized," Proteostasis CEO Meenu Chhabra said in the statement.